The Members of Sparc Systems Limited Report on the Standalone Financial StatementsOpinion
We have audited the standalone financial statements of Sparc Systems Limited ("theCompany") which comprise the balance sheet as at 31st March 2019 and the statementof Profit and Loss statement of changes in equity and statement of cash flows for theyear then ended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information. In our opinion and to the best ofour information and according to the explanations given to us the aforesaid standalonefinancial statements give the information required by the Act in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2019 andprofit changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
Description of each key audit matter in accordance with SA 701:
|The Key Audit Matter ||How the matter was addressed in our Audit |
|Loans & Advances Deposits etc. || |
|The value of loans and Advances Deposits as at 31st March 2019 is significant and there is a high degree of complexity and judgement involved for the company in the estimating individual and collective credit impairment provisions and write-offs against these loans. The Company's impairment provision for receivables from financing business is based on the expected credit loss approach laid down under Ind AS 109. Under this approach the management has been required to exercise judgement in areas such as; calculation of past default rates applying macro-economics factors to arrive at forward looking probability of default; and significant assumption regarding the probability of various scenarios and discounting rates for different industries considering individual borrower profile. In view of the high degree of estimation involved in the process of calculation impairment provision and considering its significance to the overall Ind AS financial statement whereby any error or omission in estimation may give rise to a material misstatement of Ind AS financial statements it is considered as a key audit matter. Refer Note 8 & 11 to the standalone financial statements. ||Our audit procedure included considering the appropriateness of the company's accounting policies for impairment of financial assets and assessing compliance with Ind AS 109. For loans which are assessed for impairment on a portfolio basis we performed particularly the following procedures: We understood the methodology and policy laid down for loans given by the company. we have verified the existence of recovery process plant in the event of default. we have verified the historical trends of repayment of principal amount of loan and repayment of interest. we tested the reliability of the key data inputs and related management controls. we have assessed the assumptions made by the company in making provision considering forward looking information. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors are responsible for the preparation of the otherinformation. The other information comprises the information included in the annualreport but does not include the standalone financial statements and our auditor's reportthereon. Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon. In connectionwith our audit of the standalone financial statements our responsibility is to read theother information and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe have performed we conclude that there is a material misstatement of this otherinformation. we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance (changes in equity)5 and cash flows of the Company inaccordance with6 the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit. (b) In ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books.
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(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules (e) On the basis of the written representations received fromthe directors as on 31st March 2019 taken on record by the Board of Directors none ofthe directors is disqualified as on 31st March 2019 from being appointed as a director interms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
(g) With respect to the matter to be included in the Auditors' report under Section197(16):
In our opinion and according to the information and explanation given to us theCompany has paid remuneration to its directors during the year is in accordance with theprovisions of and limit laid down under section 197 read with Schedule V of the Act.
(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
1. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements.
2. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
3. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
For R SONI & COMPANY Chartered Accountants Firm's Registration No. 130349W
RAJESH SONI Partner
Membership No. 133240 Mumbai May 30 2019
Annexure A to the Auditors' Report
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended March 31st2019 we report that: i. a. The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets. b. The Companyhas a regular program of physical verification of its fixed assets by which fixed assetsare verified in a phased manner over a period of one years. In accordance with thisprogram certain fixed assets were verified during the year and no material discrepancieswere noticed on such verification. In our opinion this periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. c. According to explanation given to us the title deeds/ lease deeds are held inthe name of the company. ii. As explained to us the inventory has been physicallyverified by the management of company during the year. In our opinion the frequency ofsuch verification is reasonable. The Discrepancies noticed on verification were notmaterial and have been dealt with in Books of Accounts. iii. a. The Company has notgranted loans to any party covered in the register maintained under section 189 of theCompanies Act2013 (the Act') b. No Loans granted to any parties in the registermaintained under section 189 of the act Accordingly paragraph 3(ii) (b) of the order isnot applicable to the company in respect of payment of the principal amount. c. There areno overdue amounts for period of more than ninety days in respect of the loans granted tothe bodies corporate listed in the register maintained under section 189 of the act. iv.In our opinion and according to the information and explanations given to us the Companyhas complied with provision of section 185 and 186 of Act with respect to the loan andinvestment made. v. The Company has not accepted any deposits during the year within themeaning of the provisions of section 73 to 76 or any other relevant provisions of theCompanies Act and the rules framed there under. vi. The Central Government has notprescribed the maintenance of cost records under section 148(1) of the Act for any of theservices rendered by the Company. vii. a. According to the information and explanationsgiven to us and on the basis of our examination of the records the Company is regular indepositing undisputed statutory dues including provident fund income tax service taxgoods and service tax cess and other material statutory dues with the appropriateauthorities. As explained to us the Company did not have any dues on account of salestax wealth tax duty of customs value added tax employees' state insurance and duty ofexcise.
b. According to the information and explanation given to us there is no disputepending in respect of dues of provident fund/ sales tax/wealth tax/service tax/customduty/excise duty/goods and service tax/cess/value added tax were in arrears as at 31stMarch 2019 for a period of more than six month from the date they became payable. viii.The Company did not have any outstanding dues to financial institutions banks ordebenture holders during the year. ix. The Company did not raise any money by way ofinitial public offer or further public offer (including debt instruments) and term loansduring the year. Accordingly paragraph 3 (ix) of the Order is not applicable. x. Basedupon the audit procedure performed for the purpose of reporting the true and fair view ofthe Financial Statements and according to the information and explanations given to us nomaterial fraud on or by the Company has been noticed or reported during the course of ouraudit. xi. According to the information and explanations given to us and based on ourexamination of the record of the Company managerial remuneration has been paid / providedin accordance with the requisite approvals. xii. In our opinion and according to theinformation and explanations given to us the Company is not Nidhi Company. Accordinglyparagraph 3(xii) of Order is not applicable. xiii. According to the information andexplanations given to us and based on our examination of the record of the Companytransactions with related parties are in compliance with sections 177 and 188 of CompaniesAct 2013 where applicable and details of such transactions have been disclosed in theStandalone Financial Statements as required by the applicable accounting standards. xiv.The Company has not made any preferential allotment or private placement of shares orfully or partly convertible debentures during the year under review. xv. According to theinformation and explanations given to us and based on our examination of the record of theCompany the company has not entered into any non-cash transactions with directors orpersons connected with him. xvi. According to the information and explanations given tous the provisions of the section 45-IA of the Reserve Bank of India Act 1934 are notapplicable to the Company.
For R SONI & COMPANY Chartered Accountants
Firm's registration number: 130349W
RAJESH SONI Partner
Membership No.133240 Mumbai May 30 2019
Annexure B to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act") We have audited the internalfinancial controls over financial reporting of Sparc Systems Limited ('the Company') as of31st March 2019 in conjunction with our audit of the Standalone FinancialStatements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India (the"ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies safeguarding of its assets prevention and detection of frauds anderrors accuracy and completeness of the accounting records and timely preparation ofreliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
1. Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
2. Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
3. Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the company has in all material respects an adequate internalfinancial control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 312019 based on theinternal control over financial reporting criteria established by the company consideringthe essential components of internal control stated in the guidance note on audit ofinternal financial control over financial reporting issued by the Institute of CharteredAccountant of India.
For R SONI & COMPANY Chartered Accountants
Firm's registration number: 130349W
Rajesh Soni Partner
Membership No.133240 Mumbai May 30 2019